What is an Estate Bond?
An Estate bond / Fiduciary bond / Probate bond is a financial instrument required by the court in order to guarantee the court assigned fiduciary or executors will be honest, faithful and disciplined in performing his/her duties to administer the estates of the deceased/incompetent person and minors for whom they are duty-bound to act on behalf of. Some of the responsibilities of the executor are filing tax returns, liquidating assets, providing financial recommendations, etc.
The primary Types of Estate Bonds are:
Required when no will exists or will cannot be located. The bond covers dedicated execution of the obligation of the trustee named in a will – testamentary trustee or spreads enduring execution of obligation by delegated trustee in bankruptcy matters. In short, the purpose of an Administration Bond is to protect the creditors and lawful heirs of the estate.
Types of Administration Bonds:
a) Administration with will annexed – Required when executor named in the will or those appointed are deceased or refuse to act as administrator(s) of the estate.
b) Administration de bonis non – Required when the named executor in the will dies, resigns or is removed before completing the estate.
c) Administration pendent lite – Bond is required when will is being contested.
Administration Bonds may be requested for the following reasons:
Required by the office of the Public Guardian and trustee or the court.
Bond is required when the executor(s) named in the Will resides outside the province or Canada.
Trustee in Bankruptcy Bonds are required by the court appointed Trustee in Bankruptcy.
The bond guarantees the trustees’ compliance with the Bankruptcy Act. It also ensures that the debt/creditors of the estate will be treated in an equal and fair manner as prescribed by the laws governing bankruptcy.
Executor Bonds are mandated by the court in order to provide assurance that the executor of an estate correctly allocates the assets for an incapacitated or deceased person with whom they have been assigned fiduciary duty.
In other words, Executor Bonds are directed by the court in order to guarantee the honest accounting and faithful performance of duties by a fiduciary or trustee. Executor Bonds provide assurance that the executor of an estate appropriately handles, and distributes, the assets of the disabled or deceased person whom they are duty-bound to act on behalf of.
Others (not part of Estate Act):
Required typically by financial institutions or private companies in lieu of probating estate. Mostly these bonds are required to transfer assets like stocks, investment funds on the name of beneficiary of estate without the need to acquire probate letter. The waiver of probate bond is inexpensive and less time consuming as compared to probate bonds.
When there is no Will and known beneficiaries of an estate, the Public Trustee is designated as Guardian as well as Trustee by the court in Ontario. This bond is required by the Public Guardian’s office when they find “Known” heir/beneficiary of the estate.
When is Estate bond required?
Estate bonds are required by court and the public Guardian’s office to protect estate creditors, beneficiaries and in the case of guardianship, the minor and the incapacitated.
How to apply for Estate bonds?
Applying for an estate bond can be confusing and overwhelming. To help you go through the application process, we have created a list of the documentation you may need. The licensed Surety will provide the Applicant/Court with a bond subject to receipt and satisfactory review of the following documentation:
*Other information may be required depending on the estate size and complexity.
Given the size and circumstances of the estate, costs of the estate bonds will vary from Surety Company to Surety Company.
How to apply for Waiver of Probate Bond?
How to cancel an Estate/Guardian Bond?
Frequently Asked Questions:
1) What is meant by Intestacy?
Intestacy is when a person dies without a will.
2) Define preferential share
Preferential share is the amount prescribed by a regulation made under the lieutenant Governor.
3) A. Intestacy where spouse and no issue (children), who and what portion is entitled to the Estate?
When a person dies intestate in respect of property and is survived by a spouse and not survived by issue, the spouse is entitled to the property absolutely.
B. Spouse and 1 child?
When a person dies intestate in respect of property and leaves a spouse and one child, the spouse is entitled to one-half of the residue of the property.
C. Spouse and 2 children?
When a person dies intestate in respect of property and leaves a spouse and more than one child, the spouse is entitled to one-third of the residue of the property.
D. Children only?
When a person dies intestate in respect of property and leaves children surviving him or her, the property shall be distributed, subject to the rights of the spouse, if any, equally among his or her children who are the nearest degree in which there are children surviving him or her.
4) According to “Heirship” in what order do the surviving heirs of an Estate follow?
Degree of kindred
5) Define Participant
Participant means a person who is entitled to designate another person to receive a benefit payable under a plan on the participant’s death.
6) Define Beneficiary
Beneficiary is a person entitled to a portion of an Estate.
7) Who determines preferential share?
The lieutenant Governor in council may be regulation, prescribe the amount of the preferential share.
8) Define the following:
Cohabit means to live together in a conjugal relationship, whether within or outside marriage.
Dependent means the spouse or same-sex partner of the deceased, a parent of the decreased, and a child of the deceased or a brother or sister of the deceased, to whom the deceased was providing support or was under a legal obligation to provide support immediately before his or her death.
C. Same-sex partner
Same-sex partner means either of two persons of the same sex who have cohabited continuously for a period of not less than 3 years or in a relationship of some permanence, if they are natural or adoptive parents of a child.
Spouse means a person of the opposite sex to whom the person is married or with whom the person is living in a conjugal relationship outside marriage, if the two persons have cohabited for at least one year, are together the parents of a child or have together entered into a cohabitation agreement under the family law act.
9) In Ontario when is one considered common law under the family law act?
In Ontario you are considered common law if the two persons have cohabited for at least one year together.
10) What is a certificate of Appointment of Estate Trustee with a Will or without a Will?
Certificate of Appointment Estate Trustee with a Will or without a Will was formerly known as letters probate, this document is issued by the court giving the Estate Trustee(s) named in the Will the power to administer the estate under the Will. Also formerly known as Letters of Administration, this document is issued by the court giving the Estate Trustee(s) the power to administer according to the applicable Laws, the Estate of a person who died without leaving a Will.
11) What is a holographic Will and is it valid?
A Holographic Will is a hand written document that speaks about the distribution of a person’s Estate.
12) Define Testate
Testate means when a person dies with a Will.
13) Define probate or letters of Administration
Probate of letters of Administration is authority granted to someone by the court to administer an Estate.
Applying For An Estate Bond? Have Questions?
Contact our surety experts at 1-877-213-4545 or firstname.lastname@example.org
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